Dollar Tree 2009 Annual Report Download - page 49

Notes to Consolidated Financial Statements
Company, contingent on the Company meeting certain
performance฀targets฀in฀2008฀and฀future฀service฀of฀these฀
ofcers฀through฀scal฀2009.฀The฀Company฀met฀these฀
performance฀targets฀in฀scal฀2008;฀therefore,฀the฀fair฀
value฀of฀these฀RSUs฀of฀$2.3฀million฀was฀expensed฀
over฀the฀service฀period.฀The฀Company฀recognized฀$1.1฀
million฀and฀$1.2฀million฀of฀expense฀on฀these฀RSUs฀
in฀2009฀and฀2008,฀respectively.฀The฀fair฀value฀of฀these฀
RSUs฀was฀determined฀using฀the฀Company’s฀closing฀
stock price on the grant date.
The฀following฀table฀summarizes฀the฀status฀of฀RSUs฀
as฀of฀January฀30,฀2010,฀and฀changes฀during฀the฀year฀then฀
ended:
Shares
Weighted
Average
Grant
Date Fair
Value
Nonvested฀at฀January฀31,฀2009 ฀747,493฀ ฀ $฀ 30.13฀
Granted ฀566,950฀ ฀ ฀ 43.31฀
Ve s t e d ฀(308,744) ฀฀ ฀ 31.20฀
Forfeited ฀(42,251) ฀฀ ฀ 36.19฀
Nonvested฀at฀January฀30,฀2010 ฀963,448฀ ฀ $฀ 37. 29฀
In฀connection฀with฀the฀vesting฀of฀RSUs฀in฀2009,฀
2008฀and฀2007,฀certain฀employees฀elected฀to฀receive฀
shares net of minimum statutory tax withholding
amounts฀which฀totaled฀$4.8฀million,฀$2.6฀million฀and฀
$2.9฀million,฀respectively.฀The฀total฀fair฀value฀of฀the฀
restricted฀shares฀vested฀during฀the฀years฀ended฀January฀
30,฀2010,฀January฀31,฀2009฀and฀February฀2,฀2008฀was฀
$9.6฀million,฀$8.0฀million฀and฀$8.2฀million,฀respectively.
Employee Stock Purchase Plan
Under฀the฀Dollar฀Tree,฀Inc.฀Employee฀Stock฀Purchase฀
Plan฀(ESPP),฀the฀Company฀is฀authorized฀to฀issue฀up฀to฀
1,759,375฀shares฀of฀common฀stock฀to฀eligible฀employees.฀
Under the terms of the ESPP, employees can choose
to฀have฀up฀to฀10%฀of฀their฀annual฀base฀earnings฀with-
held฀to฀purchase฀the฀Company’s฀common฀stock.฀The฀
purchase฀price฀of฀the฀stock฀is฀85%฀of฀the฀lower฀of฀the฀
price at the beginning or the end of the quarterly
offering period. Under the ESPP, the Company has sold
1,333,000฀shares฀as฀of฀January฀30,฀2010.
The฀fair฀value฀of฀the฀employees’฀purchase฀rights฀is฀
estimated on the date of grant using the Black-Scholes
option-pricing model with the following weighted
average assumptions:
Fiscal
2009
Fiscal
2008
Fiscal
2007
Expected term 3 months 3 months 3 months
Expected volatility 17.4% 25.6% 16.3%
Annual dividend yield — — —
Risk free interest rate 1.8% 3.8% 4.4%
The weighted average per share fair value of
those฀purchase฀rights฀granted฀in฀2009,฀2008฀and฀2007฀
was฀$7.78,฀$5.89฀and฀$5.74,฀respectively.฀Total฀expense฀
recognized฀for฀these฀purchase฀rights฀was฀$0.9฀million,฀
$0.8฀million฀and฀$0.9฀million฀in฀2009,฀2008฀and฀2007,฀
respectively.
NOTE 10—SUBSEQUENT EVENT
As noted in footnote 1, the Company assigns cost to
store inventories using the retail inventory method,
determined on a weighted average cost basis. Since
inception฀through฀scal฀2009,฀the฀Company฀used฀one฀
inventory pool for this calculation. Over the years, we
have invested in our retail technology systems, which
has฀allowed฀us฀to฀rene฀our฀estimate฀of฀inventory฀
cost฀under฀the฀retail฀method.฀On฀January,฀31,฀2010,฀
the฀rst฀day฀of฀scal฀2010,฀the฀Company฀began฀using฀
approximately฀30฀inventory฀pools฀in฀its฀retail฀inventory฀
calculation. As a result of this change, the Company
will฀record฀a฀non-cash฀charge฀to฀gross฀prot฀and฀
a corresponding reduction in inventory, at cost, of
approximately฀$26฀million฀in฀the฀rst฀quarter฀of฀2010.฀
This is a prospective change and will not have any
effect on prior periods.
฀฀฀DOLLAR฀TREE,฀INC.฀•฀2009฀Annual฀Report฀฀฀47